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On some forums I go to, they are giving away domains for forum posts or as contest prizes. Do you think it's worthwhile pursuing these free domains or is the time invested to get a free domain just too much for the small return?
I don't post on forums where they offer free domains. The only thing I would suggest is to evaluate what your time is worth. Domains cost around $10. So if you have to make 100 posts to win the contest, then it's well worth it. But if you have to compete against others and make thousands of posts, that's not ever going to be worth your time.
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There is this forum called forum coin that gave away dot info just for 60 forum coins (equivalent to 60 cents). Each user could get maximum 2 domains. Since I was active on the forum, I got two domains for the coins I earned through posting. Dot info is a good domaim I say good because many people think it is better than most of the new gTLDs xyz for instance.
When it comes to seo domain extension does not matter.